When altseason? Here's why Bitcoin is leaving major altcoins like Ethereum behind
Ether (ETH), the native cryptocurrency of the Ethereum blockchain, has been lagging behind Bitcoin (BTC). Historically, when BTC surges, altcoins tend to rally with larger upside price movements.
This time, Bitcoin has been clearly outperforming the altcoin market place, peculiarly in Dec. BTC market cap dominance has recently risen to a one-twelvemonth high of around 70%, largely due to the big sell-off in XRP in the past week.
The difference in the price discovery of Bitcoin
The departure betwixt the electric current price trend of Bitcoin and previous balderdash cycles in 2018 and 2019 is that BTC has entered price discovery.
Simply put, price discovery is when an asset's price surpasses the previous high and keeps going into uncharted territory. Altcoins usually get stagnant when Bitcoin enters price discovery because BTC sucks up the volume from the altcoin market.
Moreover, when Bitcoin is surging chop-chop, it is also decumbent to large curt-term pullbacks. The trouble for altcoins is that when BTC rises, they fall behind BTC, and when BTC pulls dorsum, altcoins typically see fifty-fifty larger corrections.
In the foreseeable futurity, it is critical for the altcoin marketplace to see Ether gain momentum against Bitcoin. This would likely kickstart the adjacent altcoin season if i emerges in the near term.
Currently, Ether is however underperforming against Bitcoin. The ETH/BTC pair, beyond nearly high fourth dimension frames, including the daily chart, notwithstanding shows no sign of a breakout.
Equally such, the ideal scenario for the altcoin marketplace is to see the ETH/BTC pair lesser out so break out for altcoins to see renewed momentum.
Cointelegraph Markets' analyst, Michael van de Poppe, pinpointed that traders are currently fearful of buying altcoins due to the market place dynamic. He also emphasized in his latest ETH technical analysis that the ETH/BTC pair is yet showing weakness.
He added that Ether's weekly chart shows a clear breakdown below support on the BTC pair, which suggests that further weakness for altcoins is likely. Poppe noted that the ETH/BTC pair would have to rise above 0.026 BTC to reclaim bullish momentum.
"However, every bit long as ETH remains above 0.021 sats, bullish arguments tin all the same be made for more than upside equally the upwards construction would nevertheless exist intact," he explained, adding:
Ideally for ETH, a reclaim of the 0.026 sats level would betoken strength and further continuation, and so traders should sentry that level first. If that fails to hold, the adjacent area to watch is the 0.021 sats zone aslope the $450 region.
And so when could altcoins become attractive?
Indeed, there is a potent argument to exist made that the so-called "altseason" might not even announced in Q1 2021.
Bitcoin is now 25% above its 2017 high, and Ether is withal fifty% below its 2017 ATH. https://t.co/IIuU9KEEs0
— Ansel Lindner (@AnselLindner) Dec 25, 2020
Some analysts say that since Bitcoin is seeing a rally led past institutional investors, the profits from Bitcoin will not bicycle dorsum into the altcoin market this time effectually.
Nevertheless, some traders wait altcoins to become more compelling every bit Bitcoin rallies. A pseudonymous trader known equally "Salsa Tekila" stated that capital letter could rotate back into altcoins if Bitcoin continues to surge, considering that altcoins historically performed well in the first quarter after BTC peaked in December. He wrote:
"The higher $BTC goes, the more attractive altcoins get. BTC marketplace cap currently half-dozen.5X ETH market place cap. $ rotation gene is plausible, peculiarly coming in 2021 with $ETH staking popularizing. Top odds would be catching altcoins while they nuke during a grand bitcoin finale."
Source: https://cointelegraph.com/news/when-altseason-here-s-why-bitcoin-is-leaving-major-altcoins-like-ethereum-behind
Posted by: rodriguezwiterestich.blogspot.com
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